The oil market is preparing for a price collapse: causes and consequences for the global economy

The global oil market is experiencing a significant oversupply, putting pressure on prices. A record 1.3 billion barrels of crude oil are sitting in the oceans, either in transit or waiting for buyers.

This is reported by Bloomberg .

The journalists noted that the increase in production from both new and traditional exporters is creating a supply surplus on the global market. According to them, the current volume of oil in offshore storage is the highest in the entire observation period.

Analysts predict that if current trends continue, the price of a barrel of Brent oil could drop to $50 by mid-2026.

The article says that among the factors driving the increase in supply is the active entry of new producers into the market. In particular, Guyana, which did not produce oil until a few years ago, now regularly receives oil tankers off its coast.

In parallel, the United Arab Emirates is shipping record volumes of crude oil in recent years. Additional pressure on the market is also being created by Russia, which, under sanctions, is expanding oil supplies to India and China, offering significant discounts.

According to estimates by the International Energy Agency, in 2026, global oil production could exceed consumption by 3.8 million barrels per day, which would be a record.

Journalists also note that the decline in oil prices is a positive factor for consumers and some politicians. In particular, in the US, the price of gasoline has fallen below $3 per gallon for the first time in 3 years.

At the same time, cheap oil poses risks to state budgets for exporting countries. It is noted that Saudi Arabia needs a price of about $90 per barrel to break even, and for some OPEC+ countries, over $100.

By the way, Russian oil prices have fallen to their lowest level since the Russian Federation’s full-scale invasion of Ukraine.

Recall that world oil prices fell to their lowest levels in a month the day before . The reasons were forecasts of excess supply in the market and expectations of a possible peaceful settlement between Russia and Ukraine, which could affect production and export volumes.

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